The TVA's River Bend solar project in northern Alabama is an exception in a state where solar has otherwise been slow to take off.

Why Alabama still lags the rest of the Southeast on solar

Written By Lyndsey GilpinApril 6, 2017

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Tennessee Valley Authority

While other Southeastern states are surging ahead with solar energy, advocates say a unique combination of policy obstacles, burdensome fees, and one reluctant utility company has Alabama lagging behind.

Solar represented over a third of all new electricity generation added to the nation’s grid last year, and the Southeast has had a growing role in the solar boom. According to a recent report from the Solar Energy Industries Association, North Carolina has one of the largest solar markets in the country, with more than 3,000 megawatts installed, and Georgia’s solar boom added more than 1,400 megawatts last year.

Every state except Tennessee and Alabama has some sort of net metering or distributed generation policy, and recent changes in solar policies in South Carolina have allowed for more solar generation. Solar jobs are growing in the Southeast, too: Georgia now has 4,000, Kentucky has just over 1,000, and Mississippi has nearly 900.

But Alabama – despite having nearly 200 sunny days per year – still hasn’t taken advantage of its solar potential. Alabama has no renewable energy standards and no net metering or other distributed generation policies; its laws on third-party ownership of solar are vague; and its largest utility company, Alabama Power, imposes high fees and taxes on residential solar.

“There are quite a few major policy hurdles,” said Christina Andreen, a Birmingham-based attorney at the Southern Environmental Law Center. “Alabama’s leaders need to revisit these policies to catch up with the rest of the region.”

Change is slowly occurring –within the last year, the state has seen substantial growth in utility-scale solar projects, with projects slated to come online this year. There’s also more interest from homeowners and small business owners in transitioning to renewable energy, and more pressure from solar advocates on local and state governments.

But, experts say, until more solar-friendly policies are implemented, the state will most likely remain behind the curve.

Alabama’s discouraging policies

Alabama is ranked 49th in solar jobs. Just 530 people are employed by the solar industry, most of those in the northern part of the state. According to the Solar Energy Industries Association, Alabama has only 105 megawatts of solar – with all but two of those megawatts installed in 2016. About 10,000 homes are powered by solar, generating only .02 percent of the state’s electricity.

The low numbers are the result of several regulatory issues, said Daniel Tait, CEO of nonprofit Energy Alabama.

“At the end of the day, Alabama has three things not going for it,” he said. “There are no basic conditions that most states have, like operating procedures of how to handle solar; in most areas of the state there are onerous fees; and there are terrible buybacks.”

The state is essentially divided into two regions run by two utility companies that take different approaches to renewable energy, Tait added. The majority of Alabama’s solar projects are in the northern third of the state, where Tennessee Valley Authority has invested heavily in renewable energy. The utility offers competitive rates to incite people to install solar on their homes and businesses.

But in the rest of the state – including major cities like Birmingham and Montgomery – Alabama Power owns the market. The utility offers few incentives to make the transition to solar, charging customers a fixed fee of $5 per kilowatt per month based on the size of their rooftop solar array, which eats into potential savings. “It’s a punitive policy, discouraging growth of rooftop solar in the state,” Andreen said.

In addition to the fixed fee, Alabama Power has a low buyback rate compared to other major utilities in the region. Customers who sell their extra solar energy back to the grid get between three and four cents per kilowatt-hour, compared to about 12 cents for Tennessee Valley Authority customers.

Michael Sznajderman, spokesperson for Alabama Power, said the fixed charge covers the cost of the utility having power to provide customers when their solar panels aren’t generating any, and the low buyback rate is because conventional energy is much cheaper in Alabama than other states.

“We think that’s the fair way to go,” he said. “We see interest but very often when we talk to people about the costs of it and the comparison to conventional power they can purchase, when they dive deeper into it, it doesn’t make financial sense.”

However, according to solar advocates, this current financial structure is partially why rooftop solar adoption is so low.

In addition to the high rates, the state has not implemented a renewable energy portfolio or renewable standards to meet, and there are no solar-friendly policies like many other Southeastern states have. The Alabama Public Service Commission has repeatedly blocked net metering, most recently in 2016. But solar advocates aren’t necessarily asking for net metering in Alabama – they just want a negotiated rate that is fair to utilities and solar producers.

Alabama’s policy on third-party ownership of solar panels, which could help lower the upfront costs for rooftop solar customers, is still unclear, but state and local governments have made no recent moves to legally allow it.

As noted in a 2016 report from the Center for Biological Diversity, Alabama does not have community solar regulations either, which would allow community members to pool together resources to install solar projects.

Due to these roadblocks, Energy Alabama and other solar nonprofits have been helping small businesses and homeowners go off the grid or behind the meter with their own storage systems.

“We do have challenges – more than our fair share compared to most states – but solar is still attractive in Alabama,” Tait said. “So you go behind the meter, and get around the bad policy we have.”

Utility scale solar as the path forward

Rooftop solar growth may be moving slowly, but utility-scale projects in Alabama are gaining momentum. Tennessee Valley Authority runs the largest solar farm in the state – 75 MW on over 600 acres of farmland. The utility is also working with Google to turn an old coal plant into a data center powered by renewables.

In 2015, the Alabama Public Service Commission approved an Alabama Power plan to build or procure up to 500 MW of renewable energy from facilities 80 MW or smaller. Two solar projects will help the Department of Defense reach its renewable energy goals: one at Fort Rucker, which is about 10 MW, and the other at Anniston Army Depot, which is just over 7 MW. Both come online this year.

A 72 MW solar farm near LaFayette, a small town southeast of Birmingham, will be completed by the end of the year. It will provide renewable energy credits to Walmart, a major employer in Alabama.

In late 2016, Alabama Power put out a call for more solar project proposals. Sznajderman said they received over 200, and are in the process of whittling them down to find which ones could be taken to the commission for approval. “If a [company] has goals they’re trying to meet, we will work with them,” he said.

With a major utility company and state lawmakers reluctant to change rates and regulations, large-scale projects present the most obvious path forward for solar in Alabama – at least in the short-term future. In the meantime, solar advocates are focusing their efforts on increasing public engagement with the public service commission, local lawmakers, and utility companies and recommending programs and policies for more open access to solar and other clean energy sources.

“The more education that can happen around these policies, the more people learn about them and see solar panels around and want their own, there’s definitely an opportunity for change,” Andreen said.